House prices in the UK grew at an annual rate of 2.7% in June, following a 0.2% rise the previous month, according to the latest data by Zoopla.

Buyer demand has surged since property markets reopened. However, the number of houses being listed has not increased at the same pace, creating an imbalance between supply and demand and therefore resulting in a surge in prices, Zoopla reveals. 

Manchester, Liverpool and Sheffield are among the top six cities registering the highest levels of price growth. London is still seen as the biggest market, the data showed, especially since the stamp duty holiday was rolled out by the Chancellor, propelling sales by 27% in the weeks following the announcement. 

Based on the findings, Richard Donnell, director of research and insight at Zoopla, established a projection for the property market and house prices in 2021. 
Donnell said: “COVID and the lockdown have shifted the dynamics of supply and demand across the housing market.

“The staggered reopening of housing markets across countries and the added impetus from the stamp duty holiday mean we expect buyer demand and new sales volumes to hold at current levels over the next two months. The net result will be continued support for house price growth at current levels over the second half of the year. Regional cities in northern England and the Midlands have the strongest underlying trends.

“We expect rising unemployment to weigh on market activity over the final quarter of 2020 and into the first half of 2021. Further government support for the economy cannot be ruled out however, while forbearance by lenders, and the availability of the mortgage payment deferrals, which can start up until the end of October for three to six months, is likely to limit the scale of downside for house prices. Much depends on how businesses respond to the outlook and their decisions on staffing levels and the knock on impact for unemployment.”

Steve Seal, managing director at Bluestone Mortgages, added: “It is promising to see house sales returning to pre-COVID levels and buyer demand at a healthy level, as indicated by today’s Zoopla figures. While the stamp duty cut should help rally demand in the short-term, we will need to address a more crucial issue over the long-term – supporting the growing numbers of borrowers who are not able to secure high-street lending once the pandemic subsides.”